Josh Zive Testimony on EPA Carbon Plan

July 30, 2014

Thank you for giving me the opportunity to speak for a few minutes today. My name is Joshua Zive. I am testifying as a counsel for the Electric Reliability Coordinating Council—the ERCC. ERCC is a broad-based coalition of energy companies that works to ensure that consumers across the United States continue to have access to reliable, affordable, and environmentally responsible power.

Climate change policy is complicated and involves difficult choices and careful balancing of costs, risks, and benefits—and it must take into account the international nature of carbon emissions. However, this attempt to establish a nationwide energy and electricity policy through EPA regulations is not the proper way to engage in this policy debate. ERCC shares the concerns about EPA’s proposal that have been raised by many states, energy companies, small businesses, manufacturers, legal experts, and individuals. This proposal is an unprecedented use of an obscure provision of the Clean Air Act that threatens the reliability of our country’s electricity supply and will result in significantly higher energy costs, all without appreciable benefits. EPA should not finalize the proposal as written and should provide additional time for comments and analyses to be prepared.

The reliability risks created by the proposal are significant, and need to be carefully analyzed prior to the adoption of climate change policies. When electricity is unreliable, vulnerable populations can face life-threatening conditions as result of heat or cold, and the basic functioning of our economy is imperiled.

EPA’s proposal increases the risk that our electricity supply will be less reliable. EPA’s “building blocks” require that states seeking EPA approval reconfigure both how electricity is generated and how it is dispatched, and at the end of this process the proposal also promises that almost a third of the existing coal-fired generation fleet will be retired between 2020 and 2022. These plants currently provide electricity that sustains our economy and the health and well-being of our citizens, and when these plants are shuttered our electricity supply will be entirely dependent on EPA’s predictions about energy efficiency and the growth of costly, underdeveloped alternative energies. Our fear is that without these generating facilities, another polar vortex or heat wave may expose these vulnerabilities and subject citizens and businesses to energy shortages and price shocks.

EPA is not in a position to craft reliability policies, and EPA has never been tasked with such authority by Congress. One FERC Commissioner has recently stated that he was provided “zero” chance to review the Clean Power Plan, that EPA’s reliability assessments are “always” wrong, and that EPA has “underestimated the number of retirements from the very beginning.” The fact is that effective reliability policies result from the careful coordination between FERC, state and regional regulators and reliability organizations, and other stakeholders—and under this proposal EPA would be given the power to trump their decisions by approving or disapproving state energy policies.

ERCC is also concerned because EPA’s proposal will increase electricity prices for households and businesses. In fact, EPA admits that electricity prices will increase between 6 and 7 percent nationally in 2020 as result of the rule, with some areas facing double-digit increases in electricity prices.

These increases are uniquely harmful to vulnerable populations—such as the poor and the elderly— because the money needed to pay for electricity can directly affect their ability to purchase products and services essential to their health and well-being. Additionally, even small increases in electricity prices can be harmful because they increase the operating costs for manufacturers, schools, and hospitals.

EPA has attempted to camouflage these increases by promising that they will save households money by encouraging them to use less electricity, but that is cold comfort. Knowing that the government is trying to make you use less electricity will do nothing to help people on fixed incomes who have to run their AC longer during a heat wave or their heat during a cold snap—because a promise of greater efficiency or lower costs in the next decade will not pay their bills at the end of the month.

Some proponents here today seem to think that the proposed rule will reduce asthma. Because the rule produces little if any benefits, EPA appears to be purposefully confusing the rule with one designed to address conventional air pollution. The fact is that EPA admits that conventional air pollution has been on decline for years and the Agency has adopted a number of recent rules to address the very sort of emissions it now claims to be reducing with the carbon rule. Put another way, the Agency continues to pile on new regulatory costs but claims the same old benefits it has used before to justify other costly rules. This is called double accounting, and frankly it got some folks in serious trouble a few years ago at Enron and in the home mortgage industry.

Carbon emissions are a global issue. Indeed, US carbon emissions have been stable or declined over the last decade. By contrast, Chinese emissions have increased over 170 percent while Indian emissions have increased over 90 percent. Therefore, climate policy requires a comprehensive approach incorporating coordinated legislation, international diplomacy, and a thorough deliberative process. However, this proposal is risky, expensive, and will do nothing to address the global nature of carbon emissions. EPA’s proposal comes with real risks for the health and economic well-being of our country, and the proposal should not be finalized as currently drafted.